Very basic pension advice..... absolute beginner!

speedysloth

I have a pension. In fact last year I checked all of the paperwork and have 3.... none have a huge amount in them. One is a personal pension I started with Standard Life many years ago. I stopped contributing when my company offered a pension, just the very basic sort but I got tax relief and employer contribution. That changed to a workplace pension about 18 months ago as the fees of this 2nd pension didn't comply with govt regs. I get the basic 3% employer contribution. Until recently, living costs and mortgage sucked up most of my income, so it's only lately I have spare cash I can use to try and increase the pot. I'm 58..... yes I know I should have looked into this sooner!! 
I still have a mortgage to clear, (5 years at current repayments) but do have commission bonus which I have been putting straight into the pension. The pots I have don't seem to be growing..... year on year seem to have stayed much the same, so I guess these are not working very hard for me. 
A conversation with a financial advisor seemed the way to go, but alarm bells went as he was more concerned about just transferring all of my 3 pots into one he recommended, and when I mentioned 'St James Place' to a friend I was told they have a reputation for high charges. I made an approach to another FA (apparently an independent) but he also seemed to have the same approach, and fees! I just need information! And guidance! I am happy to learn, but right now I feel I have a 1000 pcs jigsaw and so far have only found the corners..... I have read some threads on here but I don't understand the jargon.
Can anyone recommend a starting place - I need a 'Pensions for Dummies' book! Or should I persevere finding an advisor?? I want to learn, but not sure where to start. 
I would appreciate any advice to point me in the right direction, thank you!

Albermarle

Normally an IFA ( INDEPENDENT financial advisor) is best but will not be interested if the amounts are relatively small ( in pension terms , means less than £50K) 
These links may help.
Pensions: Everything you need to know for retirement (moneysavingexpert.com)
The Pensions Advisory Service
Also you can have a free one hour meeting here ( its not personal advice but general ) 
50 or over? | Get to know your pension options | Pension Wise
To get some better comment from the forum , it would be simpler if you posted details of the pensions amounts and what they are invested in .

dunstonh

A conversation with a financial advisor seemed the way to go, but alarm bells went as he was more concerned about just transferring all of my 3 pots into one he recommended, and when I mentioned 'St James Place' to a friend I was told they have a reputation for high charges. 

SJP are FAs. Not IFAs.  They are also one of the most expensive distribution channels.

I made an approach to another FA (apparently an independent) but he also seemed to have the same approach, and fees!

There should be no apparently about it. An adviser is either an IFA or an FA.      There will be a fee.   The IFA cannot do it for free.   I guess you don't work for your employer for free.

Consolidating legacy pensions is often the cheapest option via an IFA.  Unlikely if you are using an FA like SJP though.    So, it shouldn't raise any alarms with that being considered.  Based on thousands of transfers I have done, I would estimate around 4 out of 5 legacy plans are better off in a modern plan.

If you prefer to DIY rather than use an IFA (you shouldn't use an FA) then you will need to read up and learn about it.    Why dont you tell us what you have found or believe you need to do so far.  That will give an indication of your current knowledge level and whether you are ready to DIY or not.

speedysloth

Thank you, sorry I know such a lack of education must be frustrating on a forum where everyone seems to know so much - I will take a look at those! I had seen the 1 hour consultation - at this stage I feel I don't even know what I don't know - if that makes sense, so wanted to try and gather a bit more info and collect questions before I ask. And trying to read threads here makes everything seem more complicated. 
Value-wise, I have £10k with Standard Life, £40k with Phoenix Life, and £36k with SmartPension. I'm looking to add £30-40k (inc tax element) a year but want to know the best place to put this, and what I should do with the 1st and 2nd pensions that I'm no longer contributing into..... I think I need to read the links as that may help! 

OldMusicGuy

Start with this book: DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning by John Edwards. Get an appointment with PensionWise, and also go to the PensionWise website as they have a lot of useful information. If you have DC pensions you can most likely consolidate them for free, you do not need any form of IFA. But first you need to understand how pensions work as you probably haven't chosen anything but the default fund choices (which is why your pensions aren't "working"). 

Stay away from companies like SJP. Make sure you understand why you might want an IFA and what they do before you rush in to getting one. That book will help, there are lots of good threads on here. 

speedysloth

I've just started looking at the first link, so I can confirm that yes, all 3 are DC pensions (defined contribution?) and no I haven't selected anything so they are the default funds in that case. Thanks, that book looks like a good read!  

Dazed_and_C0nfused

Are your pensionable earnings sufficient to contribute £30-40k?

speedysloth

dunstonh said:

I made an approach to another FA (apparently an independent) but he also seemed to have the same approach, and fees!

There should be no apparently about it. An adviser is either an IFA or an FA.      There will be a fee.   The IFA cannot do it for free.   I guess you don't work for your employer for free.  

It was confusing (as a beginner newbie) that he was and IFA but worked for a company. I guess I was expecting an IFA to be self-employed rather than working for a company, which is probably inexperience on my part. I had no problem paying for advice, but the fees mentioned (I think 5% of fund value) seemed much the same as SJP had quoted.

speedysloth

Dazed_and_C0nfused said:

Are your pensionable earnings sufficient to contribute £30-40k?

OK, I had no idea there was a pensionable earnings value or what that would be..... I get a basic+commission bonus, anticipated to be £80k+. Does that answer the question...?
I think there is a cap at £40k a year though on the total contribution you can put in. 

xylophone

Had you considered simply transferring the old pensions into your current workplace scheme  and then contributing as much as possible?

https://www.smartpension.co.uk/members

Can I transfer in my other pension savings?

Having your pension savings in one place could make them easier to manage.

However, there are a few things you need to consider before making a decision to

transfer your other pension savings to the scheme, including:

• the charges for each pension plan

• whether there are any penalties for transferring

• whether there any benefits or guarantees you may lose if you do decide to

move your money

• what retirement options are available – these can vary depending on pension

provider

Remember we will only accept transfers from defined contribution (DC) pension schemes. This is the money you build up when you and/ or your employer pays into your pension, including anyinvestment gains and only where the amount is over £100.

To find out more information about transferring your pension savings, visit

www.smartpension.co.uk/member.

I'm looking to add £30-40k (inc tax element) a year 

https://www.gov.uk/tax-on-your-private-pension/annual-allowance

Have you obtained a state pension forecast?
https://www.gov.uk/check-state-pension

speedysloth

dunstonh said:

If you prefer to DIY rather than use an IFA (you shouldn't use an FA) then you will need to read up and learn about it.    Why dont you tell us what you have found or believe you need to do so far.  That will give an indication of your current knowledge level and whether you are ready to DIY or not.

Yup, this is my start point in my education. I did a bit of asking around, friends my age and older, and I know I will get a state pension at retirement age of 67 (worked full-time, PAYE, since I was 21, so full NI contributions) and I know I need to top that up. That would be to buy an annuity using the pension pot (I have heard women get a worse deal as they live longer) and/or a draw-down.
Really that is the basic level I'm at.
I've never even looked as ISAs or other investments, as life has pretty much been a financial struggle with nothing left to save. It's not that I am not capable, I've just never been in the position where I've needed to, although I do now have savings as well (£25k in a standard bank savings account) so it would be good to invest that in a more productive way. 
I think I need to go and look at the links, read the books, start a glossary of terms! And then hopefully I'll have a better idea of what I do need.